The Public Sector and Collective Bargaining

March 7, 2011

Sweat shops. Child Labor. Exploitation. Yeah, we get it. Labor unions were formed to address legitimate grievances of labor and to right serious wrongs. And they have served a useful purpose in assuring the quality of the trades.

I have no beef with trade unions, and most especially not with the rank and file union member. Most union workers are hard working, honest people who desire nothing more than to earn a good living and provide for their families.

Collective bargaining has its place in the private sector free market. Let labor bargain for the best deal they can get. Fair enough.

But, if the company over-commits, and agrees to wages and benefits that are unsustainable… they should either downsize or face bankruptcy. It is not the responsibility of the American Taxpayer to bail them out. The workers who bargain themselves into unaffordability will find themselves jobless. And that is a market-based correction to an overreach.

The public sector is another matter entirely.

In the private sector, the company exists to make a profit for its stakeholders. Management bargains with Labor, representing the interests of those stakeholders and Labor bargains on behalf of the worker. They arrive at an agreement which provides the needed labor at a sustainable cost which permits the profits which allow the Company to continue to operate and to continue to employ the workers. While there is some latitude for bargaining, both sides recognize that there is a balance that must be maintained to keep both labor and stakeholders happy, and that an imbalance toward either side will destabilize the ability for the Company to continue earning profits and employing labor.

Unfortunately, this balance does not exist in the Public Sector, as no one at the bargaining table represents the true stakeholder… the taxpayer!

In the public sector, the employer is the Bureaucratic Government. The Management, negotiating the contracts on behalf of the employer consists of elected officials, who seek power and seek re-election.

The public sector unions exist more to deliver votes to these elected officials than to “represent” the workers… but because of this incestuous relationship, whereby union dues support the campaigns of the officials who will ultimately decide the pay and benefits of the unions, the workers get the sweetheart deals.

So it’s a win-win, right? Everyone gets what they want, right?

The Elected Officials get campaign contributions out the wazoo. They’re happy.

Oh yeah – I neglected to mention – Big Labor supports Democrat elected officials with more than 90% of their political contributions.

So everyone’s happy, right? Everyone except the stakeholder… the taxpayer. The guy who foots the bill for both Labor and Management in this enterprise has no seat at the table! Collective bargaining in the public sector is a huge conflict of interest, an incestuous relationship – ripe for corruption, and completely disregards the people the Government exists to serve… the taxpayer.

Wages and benefits grow to the point of unsustainability, as we’re seeing in California, New York, New Jersey, Wisconsin, Ohio, Indiana, Michigan, etc. The Democrats keep kicking the can down the road, avoiding the necessary day of reckoning when the reality comes to light that they simply can’t afford what they’ve promised. But when a Chris Christie or a Scott Walker simply speaks the truth that the State is broke and cannot continue to fund the goodies these public sector unions have enjoyed historically – the unions go berserk!

The unrest we are seeing in Wisconsin, and which is spreading to other states, is being likened in the mainstream press to an Egypt-style cry for freedom. What a disingenuous comparison. These public sector workers currently receive their healthcare and pensions for free! Without any contribution on their parts! Talk about a sweetheart deal. Show me a private sector union employee who gets that today.

No, these union uprisings are not like Egypt at all. They are like France and Greece. The riots of the entitled. This is what happens when the entitled discover their Socialist Utopia has run out of other people’s money.

The fact of the matter is that Walker’s proposals will become law. Public sector unions will lose their right to bargain for benefits, and Right to Work will spread to more states. The pendulum must swing back from the extremes of its arc.

When a child is told by his mommy that he can’t have a desired toy because Mommy can’t afford it, he’ll often throw a tantrum. This is what we are seeing in Wisconsin today. But when the tantrum doesn’t work and mother and son leave the store without the toy, what happens? After a period of sulking, the boy will eventually accept the inevitable and get on about the business of living his life.

Public sector unions had best get the message that concessions are inevitable and accept it. Governments, whether municipality, city, state or federal, are out of money and running out of the ability to borrow. You can’t spend what you don’t have, in perpetuity. A day of reckoning must come. For public employees, it’s here.